13. You are considering adding a microbrewery on to one of your firm's existing restaurants. This will entail an increase in inventory of $8000, an increase in accounts payable of $2500, and an increase in property, plant, and equipment of $40,000. All other accounts will remain unchanged. The change in net working capital resulting from the addition of the microbrewery is: A) $45,500. B) $10,500. C) $6500. D) $5500.
Q: five day 95% Valu
A: Variance refers to the measurement of variability. It is to be calculated by taking the average of…
Q: Assume a $175,000 mortgage loan and 10-year term. The lender is charging an annual interest rate of…
A: Given, Mortgage amount is $175000 Annual interest rate is 6%
Q: How are the unendorsed HO-3 and the HO-5 similar? А. Both are designed to cover condominiums. В.…
A: HO-3 and HO-5 Homeowner insurance policy are insurance policies which gives coverage to a flat or…
Q: Given the information below for HooYah! Corporation, compute the expected share price at the end of…
A: Given: Year 2014 2015 2016 2017 2018 2019 Price $22.00 $58.50 $130.00 $207.00 $97.00 $27.50…
Q: A 13-year maturity convertible bond with a face value of $1,000 and a 8% coupon on a company with a…
A: The value of Bond Holder's call option=$332.07
Q: 2. You have been approved for a $72,000 4-year loan earning 10.8% compounded monthly. (a) What are…
A: pv Loan amount $ 72000 nper Period of loan 4 years 48 months Interest rate yearly…
Q: Solve the following problems. Provide proper solutions. 1. Given the information below and 15…
A: Net present value (NPV) is calculated as: = Present value of inflows - Present Value of outflow If…
Q: capital (WACC;) if it uses retained earnings as its source of common equity? Do not round…
A: WACC (Weighted Average Cost of Capital): It is known as the firm's average cost of capital and is…
Q: Catelyn makes deposits of $1438 at the beginning of every 6 months into an account earning 6.86%…
A: The future value after 2 years can be calculated with the help of future value of annuity due…
Q: Which among these options for Mr. D is the best for him to pay the least? A. higher rate B. pay in…
A: We know that Higher interest will lead to higher payment and lower interest will lead to lower…
Q: 2. A loan amounting to P1.5 million was secured dated, June 1, 2010. The loan should be paid by…
A: The retirement of debt is the process by which amount lent is repaid by borrower to the lender for…
Q: A $5000 bond bearing interest at 3.4% payable semi-annually is due in 12 years. Money is worth 8.0%…
A: Coupon rate is the rate that provides the amount of payment to be made to the holder at the…
Q: A company is going to change all light bulbs of its buliding. The initial cost is 57000 . all bulbs…
A: Given, Details about a light bulb company.
Q: 3. On January 1, 2022, JPIA Company capitalized a new word processing software package that it had…
A: Expensing the fair market value or cost of the intangible asset over the period of its life is known…
Q: What is the after-tax cost of debt? Round your answer to two decimal places. % What is the cost…
A: After - Tax cost of debt = Before tax cost of debt*(1-Tax rate) Cost of preferred stock = Annual…
Q: Ms. Pan Aram has set the goal of accumulating Php 4,000,000 for her son's college fund, which will…
A: Here, Future value of deposited amount = Php 4,000,000 Number of years = 18 years Interest rate = 8%…
Q: Suppose a company invests in a $50,000 United States Treasury bill at 3.35% interest for 28 days.…
A: Given, Investment = $50,000 Interest for 28 days=3.35% Service fee of $15. cost of the Treasury…
Q: Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely…
A: Since you have asked a multiple subpart question, we will answer the first three subparts for you.…
Q: What simple interest rate is equivalent to 5% compounded quarterly if money is invested for 10…
A: Concept. 1. Simple interest formula. SI = P × N × R…
Q: This can occur when a selection among mutually exclusive alternatives is based wrongly on…
A: Answer- Ranking errors can occur when a selection among mutually exclusive alternatives is based…
Q: To finance the development of a new product, a company borrowed $29000 at 4% compounded monthly. If…
A: Solution:- When a loan is taken, it is to be repaid in lump sum or in installments. If it is paid in…
Q: An employee obtained a loan of P486,555 at the rate of 20.774% compounded bimonthly to build a…
A: Loan amount is P486,555 Interest rate is 20.774% Compounded bimonthly To Find: Nominal rate…
Q: What are the weaknesses of the payback method? What other options do you have?
A: Pay back period is period required to recover initial amount of investment.
Q: A distributor purchases industrial fans for $147 each. Its profit is 9.00% on selling price and…
A: Markup refers to the amount added above cost to cover overhead expenses and profit.
Q: 20,000 issue of twelve-year bonds redeemable at par offers 7.9% coupons payable quarterly. What is…
A: Price of bond is present value of coupon payment and present value of the par value of bond…
Q: Calculate your monthly payment. Round your answer to the nearest cent.
A: Loan Payments: These are payments made by the borrower to amortize the loan value. This is done by…
Q: A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be…
A: Here, Note: We are solving Part d to g as mentioned in the question.
Q: estiöñ 15 Question 18 A firm with a 14 percent WACC is evaluating two projects for this year's…
A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: A new oven wil save s00 per year in electricity expense. How much can we aford to pay for ths oven…
A: Here, Annual savings = $90 Time period = 13 years Interest rate = 16% To Find: Affordable amount of…
Q: monthly payments for th
A: Monthly payment refers to the amount which is due and paid in regular intervals to an organization…
Q: Compute the future value of the following single investments: 2. P20,000 at 8% interest compounded…
A: The future value function can be used to compute the required value after 4 years
Q: Jody has been dreaming to purchase a car for $22,000 i. Calculate the monthly payment for the…
A: A loan is a sum of money borrowed from a third party, such as a bank, and then repaid with interest…
Q: What is the present value or price of a 10 year $20,000 annuity with an interest rate of 5% $1.9M…
A: Present value of annuity can be calculated as: = Annuity * Present Value annuity factor (i%, n…
Q: What is the correctly valued offer price, rounded to the nearest penny? How much cash will Zang…
A: Offer Price: It refers to the stock price set by an investment bank during the process of initial…
Q: A stock has had returns of 11 percent, -8 percent, 6 percent, 21 percent, 24 percent, and 16 percent…
A: The geometric return is calculated as compounded annualized return
Q: 10. Consider the following two projects with cash flows in $: Year 0 Year 1 Year 2 Project Cash Flow…
A: Here,
Q: Quad Enterprises is considering a new three-year expansion project that requires an initial fixed…
A: The cash flow for year 0 will be negative because investments are made in project and working…
Q: The next expected dividend for Stock P is 10 and the current price of the stock is P40. The risk…
A: Expected Return: The expected return is the minimum required rate of return which an investor…
Q: A. Direction: Read the statements carefully. Write TRUE if the statement is correct. Otherwise,…
A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
Q: ABC Manufacturing Company is planning to reduce its labor costs by automating a critical task that…
A: The present value method is a method of finding the profitability of a project by discounting the…
Q: Sales amount to P2,500,000. Sales terms are being revised from n/60 to n/45 and sales are expected…
A: Sales term revised to n/45 Expected decrease in sales is 10% Sales Amount is P2,500,000 Sales term…
Q: margin requirement
A: Margin requirement refers to the amount of cash or securities that an investor should deposit as…
Q: Compute the IRR statistic for Project E. The appropriate cost of capital is 8 percent. (Do not round…
A: Year 0 1 2 3 4 5 Cash flows -1,000 350 480 520 300 100
Q: 2. The company is considering a project involving the purchase of hew equi he following: Use Exhibit…
A: Net present value (NPV) It is a capital budgeting tool to decide on whether the capital budget…
Q: Nick’s Novelties, Incorporated, is considering the purchase of new electronic games to place in its…
A: Answer - Part 1 - The simple rate of return would be: Simple rate of return = Annual incremental…
Q: A stock has a beta of 1.38. The risk free rate is 0.817% and the market risk premium is 5%. What is…
A: Solution:- Capital Asset Pricing Model (CAPM) is the model which helps to compute the fair return on…
Q: A bank in Mississauga has a buying rate of ¥1 = C$0.01275. If the exchange rate is ¥1 = C$0.01315,…
A: Buying rate = ¥1 = C$0.01275 exchange rate = ¥1 = C$0.01315
Q: Stuart Rentals can purchase a van that costs $105,000; it has an expected useful life of three years…
A: Payback period = Initial investment/Expected revenue per year
Q: A firm’s current balance sheet is as follows: Assets $ 150 Debt $ 30 Equity $ 120 What is…
A: Cost of Capital or Weighted average cost of capital (WACC) is determined as below:
Q: A. Positive (increase å increase)
A: Risk is an uncertainty of mishappening which is affected by something which human values such as…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- You are considering adding a microbrewery onto one of your firm's existing restaurants. This will entail an increase in inventory of $9,200, an increase in accounts payables of $2,400, and an increase in property, plant, and equipment of $43,000. All other accounts will remain unchanged. The change in net working capital resulting from the addition of the microbrewery is: O A. $8,160 O B. $11,600 OC. $6,800 O D. $49,800You are considering adding a microbrewery onto one of your firm's existing restaurants. This will entail an increase in inventory of $8700, and increase in accounts payables of $2300, and an increase in property, plant, and equipment of $48,000. All other accounts will remain unchanged. The change in net working capital resulting from the additin of the microbrewery is?You are considering adding a microbrewery onton one of your firm's exisiting restaurants. this will entail an increase inventory of $8700, an increase in accounts payables of $23.00, and an increase in property, plant, and equipment of $48,000. All other accounts will remain unchanged. The change in net working capital results from the addtion of the microbewery is?
- Your company is considering the purchase of a new piece of manufacturing equipment. The new machine will cost $500,000. The expected benefit of the equipment will be increased productivity of $150,000 at the end of each year for five years. Calculate the net present value (NPV) for the machine assuming a cost of capital of 12% compounded annually. Your Answer: AnswerYou are considering a new product line for your business. The new product line will require investment of $3,000,000 in new equipment. The equipment will be trucked to your facility at a cost of $25,000 and will require another $250,000 to modify that equipment for use in your facility. The new product line will require an increase in inventory of $200,000, an increase in accounts receivable of $100,000, but you believe you will be able to get suppliers to offer good credit terms which should increase accounts payable by $250,000, and you will obtain a short term bank loan, increasing notes payable by $25,000. The equipment falls into the 3- year MACRS class (rates of 33%, 45%, 15%, and 7% in years 1-4, respectively). You expect to operate the new product line for only three years and then shut down operations. The salvage value of the equipment at time three is expected to be $385,000. The new product line is expected to lead to sales of $1.4 million the first year with inflation of…A manufacturing company is considerign the purchase of new machinery to increase its production capacity. The company has identified a new machine that costs $500,000 and is expected to increase production by 20%. The company expects to sell the additional products for $600,000, resulting in a net profit of $100,000. The company can finance the purchase through a bank loan with an interest rate of 5% over a five year term. What is the expected return on investment (ROI) for the purchase of the new machinery 5% 10% 20% 25%
- You are considering adding a microbrewery onto one of your firm's existing restaurants. This will entail an investment of $40,000 in new equipment. The new equipment falls under asset class 43 and has a capital cost allowance (CCA) rate of 30%. If your firm's marginal corporate tax rate is 35%, then what is the value of the microbrewery's CCA tax savings in the first year of operation? a) $2,100 b) $14,000 c) $4,200 d) $12,000A firm decides to expand its operations and use more square footage in their main office. Currently, they rent out 3000 square feet of space at a rate of $3,522.00 per month. The new expansion will use this space. The firm has a cost of capital of 9.00% APR. If the tax rate is 38.00% facing the firm, what is the opportunity cost of using this space? (consider this as a perpetuity and express your answer as a positive number)Suppose Francine Dunkleberg's Sweets is considering investing in warehouse management software that costs $450,000, has $35,000 residual value, and should lead to cost savings of $130,000 per year for its five-year life. In calculating the ROR, which of the following figures should be used as the equation's denominator (average amount invested in the asset)? a) $485,000 b) $242,500 c) $207500 d)$225000
- eEgg is considering the purchase of a new distributed network computer system to help handle its warehouse inventories. The system costs $55,000 to purchase and install and $32,000 to operate each year. The system is estimated to be useful for 4 years. Management expects the new system to reduce the cost of managing inventories by $61,500 per year. The firm’s cost of capital (discount rate) is 11%. Required: 1. What is the net present value (NPV) of the proposed investment under each of the following independent situations? (Use the appropriate present value factors from Appendix C, TABLE 1 and Appendix C, TABLE 2.) 1a. The firm is not yet profitable and therefore pays no income taxes. 1b. The firm is in the 30% income tax bracket and uses straight-line (SLN) depreciation with no salvage value. Assume MACRS rules do not apply. 1c. The firm is in the 30% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB…Innovation Company is thinking about marketing a new software product. Upfront costs to market and develop the product are $4.97 million. The product is expected to generate profits of $1.08 million per year for ten years. The company will have to provide product support expected to cost $99,000 per year in perpetuity. Assume all profits and expenses occur at the end of the year. a. What is the NPV of this investment if the cost of capital is 6.2%? Should the firm undertake the project? Repeat the analysis for discount rates of 1.6% and 14.2%, respectively. b. What is the IRR of this investment opportunity? c. What does the IRR rule indicate about this investment?A firm is considering the installation of an automatic data processing unit to handle some of its accounting operations. Machine for that purpose may be purchased for P 2M or may be leased for P 800,000 for the first year and P 100,000 less every year until the end of the 4th year. If money is worth 15%, which alternative is better and by how much?